In this week’s episode of Calling All Bank Directors, host and AABD President David Baris is joined by AABD Advisor Dave Martin, an expert in bank mergers and acquisitions, who explains how bank boards and CEOs can sell their banks now or later. 

Many community banks want to sell but they’re not sure when. Is this a good time to consider a sale? Surprisingly, it could be.

Allowances are increasing, earnings are down and so are bank stock prices. Uncertainty reigns. Why now?

Most potential bank sellers will wait. They’re not even considering a sale now. But it’s easy to imagine that there will be a rush of sellers when the pandemic ends. What impact will that have on merger prices? Will buyers become scarce?

If your shareholders receive the acquirer’s stock before the pandemic is over, the acquirer’s stock price probably will be low, too. In fact, since the onset of the pandemic, larger banks’ stock prices have been more depressed generally than smaller banks’.

Those of your shareholders who take the acquirer’s stock may see it recover, and their gain will probably be tax free while they wait. A larger acquirer’s stock often is more liquid and may pay a higher dividend, advantages that may add value for your shareholders.

For an analysis of current and future bank stock valuations, listen to our episode of Calling All Bank Directors with Bill Boyan, a Managing Partner at Piper Sandler, and read his accompanying report.

Calling All Bank Directors is available on Apple Podcasts, Spotify, Google Play, Stitcher, or wherever you get your podcasts.

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Thanks to our guest, Dave Martin.

Calling All Bank Directors is the podcast of the American Association of Bank Directors. AABD has been your advocate since 1989 and our podcast, hosted by AABD President David Baris, is designed to keep you well informed to help protect both you and your bank.

Questions? Contact [email protected].